Subway Ups Ante in Fast Food Dollar Menu War

Subway is offering a $2 subs in December, which may excite frugal fans and still keep franchisees happy.

The sandwich chain announced this week it was only selling its 6-inch meatball marinara and cold cut combo sandwiches at the discounted prices of $2 during its Customer Appreciation Month.

“It’s a magical price point,” consumer psychologist Kit Yarrow told USA Today. “What it communicates to consumers is that Subway is on their side.”

Subway did not immediately return a request for comment.

The company already has a rotating $5 foot-long submarine sandwich menu. Subway says it has 35,760 restaurants in 97 countries, more than any other restaurant chain, with 24,679 restaurants in the U.S.

Since the economic downturn began, many fast-food restaurants have featured dollar menus for a limited number of items or time period, such as Taco Bell’s $2 menu from mid-2010. McDonald’s currently has eight items on its $1 menu.

It seems a difference of $1 can make or break a promotion in the eyes of franchisees. When Burger King announced the $1 double cheeseburger in 2009, franchisees sued, saying they could not make a profit at that price. Franchisees, represented by the National Franchisee Association, and Burger King reached a settlement in April, leaving the double cheeseburger on the Value Menu at $1.29.

The franchisees did not get money in the settlement but gained more power in future decisions about the Value Menu. Burger King did not return a request for comment.

Burger King franchisees represent about 90 percent of the chain’s restaurants, according to the Associated Press. Burger King’s owner, Brazilian investment firm 3G Capital, reportedly hopes to increase that to about 95 percent because franchises carry lower overhead costs.